Bank of Canada sees less volatility from Fed tapering

(Reuters) – Market volatility spurred by the U.S. Federal Reserve’s plans to scale back its massive stimulus program is far less of a concern now than it was earlier this year, Bank of Canada Governor Stephen Poloz told Reuters on Tuesday. Investors understand the Fed’s thinking much better than they did when Chairman Ben Bernanke first mentioned the possibility of tapering the U.S. central bank’s $85 billion in monthly asset purchases on May 22, Poloz said. The market’s huge one-way bets on the Fed continuing its so-called quantitative easing suddenly had to reverse at that time, causing market turmoil, but Poloz argued that the impact now will be much smaller. People understand it much better now, and my sense of it is that there isn’t anything like that kind of stacking (leveraging) in the marketplace,” Poloz, 59, said in an interview at the central bank’s Ottawa headquarters.

    

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